Heading for a single-digit NPL ratio: FBNH 9M 2019 earnings

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Heading for a single-digit NPL ratio: FBNH 9M 2019 earnings

Earlier, FBN Holding Plc (“FBNH” or “The Bank”) released its 9M-19 results, showing a –0.4%y/y decline in Gross Earnings (GE) to N439.9bn. The Bank’s flattish topline can be attributed to sustained pressure on interest income which fell 3.0%y/y to N327.5bn amid hesitant loan growth and poor yields on interest-bearing assets. PBT and PAT, however, continued to rebound, up 16.9%y/y and 15.3%y/y to N60.0bn and N51.8bn respectively. We review the 9M earnings and adjust our expectations for FY-19 below.

Powering back to profitability: FBNH’s gross earning was flattish, reflecting the impact of the hesitant position of the bank to expand its loan book (up 1.5% YTD) amid weaker earnings yield. Notably, while the deployment of funds to investment securities decreased 9.7%, interest income on investment securities surged 12.2% to N1342.6bn. On the contrary, interest income on loans fell 8.9%y/y to N184.6bn. Although Interest expense remained unchanged at N116.0bn, Net Interest Income fell 4.6%y/y to N211.4bn on the back of weaker interest income. Thus, NIM settled at 7.3%. Additionally, Non-Interest Income reported modest growth, rising 6.0% to N98.6bn on the back of sustained uptrend in electronic banking fee, but not strong enough to buoy gross earnings of the bank. Notably, loan loss expense continues to fall sharply, down 62.6% to N28.5bn (vs N76.2bn in the prior year) as the bank complete its efforts to restructure its balance sheet. As at H1-19, management highlighted that the Atlantic energy loan which accounts for the largest portion of the NPL is fully written-off. Nonetheless, Cost-to-Income ratio jumped to 71.5% as OPEX surged 18.4% (vs. weak income growth). Overall, the improvement in loan loss expense buoyed bottom line numbers as PBT and PAT rose 16.9% and 15.3% y/y to N60.0bn and N51.8bn respectively. As such, net margin and ROE improved to 11.8% and 18.3% (vs. 10.2% and 14.8%) respectively.

Asset Quality improves on Atlantic Energy NPL Write-Off: Compared to 25.9% Dec-2018, NPL ratio fell sharply to 14.5% in H1-19 as the bank reported that it has completed the write-off of the Atlantic Energy loan. As of 9M-2019, NPL ratio is on course to hit the Bank’s single-digit NPL target at 12.6%. Nevertheless, Loan to Deposit ratio came below the CBN’s minimum threshold for both FBN Ltd and FBN Merchant Bank, both of whom were penalized by the CBN – to the tune of N77.4bn– for failure to meet the 60.0% target. We imagine that effort to boost LDR towards the new minimum threshold of 65% will drive up loan book marginally by year-end.

BUY rating retained as asset quality improves: Although Revenue growth remains unaspiring, our outlook for FBNH going forward is more positive following the full write-off of the Atlantic Energy Loan. We expect this to boost the bottom-line significantly by a full year. Also, improvement in profitability margins is projected to drive up ROE to about 20% by a full year, thus, increasing the earnings and dividend yield outlook for the bank. We estimate the dividend yield for FY-2019 at 4.9%. Yet, we note that management must check rising OPEX which continues to pressure cost to income ratio above peer average. Given the foregoing, views on FBNH is broadly positive. At its current price of N5.3/share, the bank seems to be trading at a discount to peers. This is as its PB & PE ratios settled 0.3x and 3.3x compared to peer (tier 1) average 0.6x and 2.8x respectively. As such, we retain our BUY rating on FBNH.

Sources: Company Financials, United Capital Research

United Capital Research

Total Nigeria Plc 9M- 2019: Weaker revenue and high costs pull earnings

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Total Nigeria Plc 9M- 2019: Weaker revenue and high costs pull earnings

Earlier, downstream giant, TOTAL, released its financial results for 9M19. In addition to regulatory constraints, idiosyncratic pressures dragged overall performance. Revenue declined by 2.2%y/y to N221.8bn while Cost of Sales increased (+0.4%y/y) marginally. In the same fashion, OPEX & Finance costs increased significantly, weakening bottom-line figures. As a result, loss before and after taxes for the period were -N117.0mn and -N204.8mn respectively, with a negative EPS of -N0.6/share.

Highlights of the results are discussed below in more detail.

A doleful story of lower revenue and ballooning cost items

For the period under review, TOTAL recorded a 2.2% y/y drop in its revenue, as declines in General (-15.2%y/y) and Aviation (-2.8%y/y) segments outweighed increased inflows from the Network (+2.5%y/y) segment. The topline figure settled at N221.8bn, with growth in Lubricant (+4.2%y/y) sales offset by a decrease in Petroleum Products (-3.5%y/y). Constrained by the consequences of operating in a market where petrol prices are capped, Cost of Sales remained sticky (+0.4%y/y), resulting in a 19.0% decline in Gross profit to N25.1bn. Additionally, OPEX continued to be a burning hole in TOTAL’s pocket, as Administrative expenses increased 22.7%y/y to N17.5bn, driven by technical assistance and management fees. With little financial buffer from Other Income (-29.9%y/y to N1.4bn), Operating profit tumbled 59.7% to N5.7bn.

In line with views expressed in our 2019 Nigeria Oil & Gas Sector Update, the overkill of short-term borrowing did more harm, than good. With Operating margin strained to 2.6% (vs 4.9% average in the last 3 years), a 103.3% surge in Finance costs to N6.1bn milked what was left of operating profit. Consequently, TOTAL reported a record Loss before Tax of N117mn, a huge drop from N7.7bn in 9M-18, while Loss after Tax settled at N204.8mn.

Weak Cash Flows amid increased short-term borrowing

In terms of working capital management, a couple of highlights gave us cause for concern. TOTAL’s current ratio, which measures the ability of the company’s current assets to settle current liabilities, came in at 0.9x – below the industry average of 1.1x. The quick ratio, which is a more stringent measure of liquidity, was 0.3x, compared to the industry average of 0.5x. This clearly reflects a problem in working capital management. Another sore point was the increase in Bank Overdrafts (+107.6% YTD to N45.9bn) which caused total Borrowings to soar by 57.4% YTD to N53.9bn, fueling the growth we saw in Finance costs. In addition to recording a Loss after Tax, the performance of operating Cash flows was sour, as Net Cash from operating activities was negative at -N7.4bn, as operational outflows outweighed inflows. Consequently, Cash & Cash equivalents for the period was negative at -N42.3bn.

TOTAL rated a SELL at the current Price

Despite TOTAL’s dominant position in the downstream segment, with a huge revenue size and a wide distribution network, a few issues cast doubt on its near-term profitability. We expect the company to continue to drive growth in Lubricant sales which contribute 18.1% to revenue, however, the performance of the petroleum products (PMS, AGO, DPK, LPFO & ATK) is unlikely to improve due to regulatory cap on PMS prices. Additionally, the borrowing of expensive short-term funds, coupled with elevated OPEX will continue to weigh on profitability. Elsewhere, negative cash balance signals the need to refinance short term borrowings, majorly from the banks, at lower rates in the debt capital market to boost profitability. Thus, cutting down high operating costs and refinancing borrowing at lower costs, measure to be considered going forward, to restore profitability. In the medium to long-term, we do not dispute the possibility of soft cushions from the takeoff of Dangote Refinery, which could relieve some cost pressures across the industry. That said, imminent deregulation of Petrol prices may boost revenue in the medium to long run. With the above considered, we retain our Year-end Target price of N110.5, which translates to a -10.3% downside at the current price of 123.2. Hence, we downgrade our previous HOLD rating to a SELL rating on the TOTAL.

United Capital Research

Zenith Bank 9M – 2019: Rapidly driving e-banking volumes

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Zenith Bank 9M – 2019: Rapidly driving e-banking volumes

Zenith Bank Plc (“ZENITH”) released its 9M-19 results earlier, showing a 3.5%y/y growth in Gross Earnings (GE) to N491.3bn. Also, PBT and PAT increased by 5.3% and 4.5% to N176.2bn and N150.7bn respectively. Expansion in loan book (at 9.2% to N2.7tn) was faster than Customer deposits growth, which rose 7.1% to N3.95trn. We update our estimates for the bank, and we review our expectations below.

Electronic Banking fee up 100% in 12 months: ZENITH’s GE growth was weak at 3.5%y/y to N491.3bn, no thanks to interest income which fell 5.1%y/y to N321.9bn amid lower earnings yield. Although net loans and advances grew 9.2%YTD, interest income on loans fell 18.2% to N175.2bn while interest income from other funding sources added 17.4%. Elsewhere, interest expense fell 2.9% to N107.3bn (which translates into a lower Cost-of-Funds at 2.95%) but was not enough to halt a 6.1% decline in Net Interest Income to N214.6bn. As such, Net-Interest Margin declined from 9.0% to 8.7%. Contrary to the poor outing for Interest Income, Non-Interest Income (NII) rebounded strongly in 2019, surging 21.8% to N156.8bn amid solid inflow from electronic banking fee which doubled to N35.3bn vs. N17.7bn. Impairment charges also printed a 27.3% increase, driving Cost of Risk (COR) to 1.2% from 0.9% in the prior period.

In terms of Operating Expenses (OPEX), ZENITH’s was able to keep OPEX at bay, rising 0.8% to N176.9bn. Thus, the Cost to Income ratio (CIR) slowed to 50.1% (vs. 51.2% in the prior period). Accordingly, the profit margins remained very attractive as PBT and PAT came in at N176.2bn and N150.7bn, with net margin at 30.7% while 12month trailing ROE settled at 23.7%.

Solid Capital and Liquidity position: ZENITH’s huge cash balance and relatively low Loans-to-Deposits ratio (LDR) made headline in Sept-19 when the CBN debited the Bank a total of N135.6bn due to failure to meet the Apex Bank’s minimum total funding to credits ratio of 60.0% as at Sept-19 ending. Clearly, the action of the CBN was supported by a review of the balance sheet position which shows LDR at 55.8% as liquidity ratio stood at 63.8%. However, the NPL ratio remained below the 5.0% threshold at 4.95%, while Capital Adequacy Ratio (CAR) stood at 23.8%. With recent pronouncement by the CBN, we highlight the 9.2% expansion in the banks’ loan book to N2.2tn. With an updated pronouncement by the CBN for banks to maintain a minimum of 65.0% LDR, we expect efforts to further grow credit to intensify going forward.

Stable cost profile and profit margins restate a BUY rating: Our views on ZENITH remain positive, buoyed by efficient cost-to-operating revenue profile and stable margins. Although interest income is unlikely to improve by FY-19, stronger NII performance, cheaper funding cost and stable CIR are expected to keep profitability attractive. For context, PAT is expected to close the year around N200.0bn, again in 2019. Also, low CoR at 1.2% and NPL ratio of 4.95%, buttress our position as this implies that asset quality will remain stable. As noted above, recent regulation will compel the bank to further expand credit, hence we expect some traction in this regard. Finally, at the current price, the dividend yield is estimated at 14.7%, making the stock very attractive at the current price. The bank trades at a P/B ratio of 0.6x, less than 1.2x for GUARANTY. Again, with ROE of 23.8%, the ticker remains underpriced at N17.0. Accordingly, we maintain a BUY rating on the ticker.

Sources: Company Financials, United Capital Research

Insights generated by United Capital Research

Unilever In Commitment To Waste-Free World

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Unilever In Commitment To Waste-Free World

Unilever Plc has announced new commitments to reduce plastic waste and help create a circular economy for plastics by 2025.

The company also confirmed that by 2025, it would halve its use of virgin plastic by reducing its absolute use of plastic packaging by more than 100,000 tonnes and accelerating its use of recycled plastic, help collect and process more plastic packaging than it sells.

This, the company said was in line to achieve existing commitments to ensure all of its plastic packagings was reusable, recyclable or compostable by 2025, and to use at least 25 per cent recycled plastic in its packaging, also by 2025.

A statement quoted the Chief Executive Officer, Unilever, Alan Jope, to have said plastic has its place, “but that its place is not in the environment,”

The move, according to him, would require the company to help collect and process around 600,000 tonnes of plastic annually by 2025, to be delivered through investment and partnership which improve waste management infrastructure in many of the countries in which Unilever operates.

According to him, “This demands a fundamental rethink in our approach to our packaging and products. It requires us to introduce new and innovative packaging materials and scale up new business models, like re-use and re-fill formats, at an unprecedented speed and intensity.

“Our starting point has to design, reducing the amount of plastic we use and then making sure that what we do use increasingly comes from recycled sources. We are also committed to ensuring all our plastic packaging is reusable, recyclable or compostable,” he said.

Commenting on the initiative, Founder, Ellen MacArthur Foundation, Ellen MacArthur, said, the announcement by Unilever was a significant step in creating a circular economy for plastic.

“By eliminating unnecessary packaging through innovations such as refill, reuse, and concentrates, while increasing their use of recycled plastic, Unilever is demonstrating how businesses can move away from virgin plastics.

“We urge others to follow their lead, so collectively we can eliminate the plastic we don’t need, innovate, so what we do need is circulated, and ultimately builds an economic system where plastic packaging never becomes waste.”

Access Bank Nigeria Set To Purchase Kenyan Bank

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Access Bank Nigeria Set To Purchase Kenyan Bank

Access Bank is set to procure the Transnational Bank Limited of Kenya.

The agreement, which comes exactly seven months after Access Bank successfully consummated a business combination deal with the defunct Diamond Bank would see the bank expand its footprint in Africa.

The Managing Director/Chief Executive Officer, Access Bank Plc, Mr Herbert Wigwe, confirmed the development in a telephone chat with the media yesterday.

He anticipated that the deal would be finalised before the end of next week.

Wigwe said Access Bank would formally notify the Nigerian Stock Exchange (NSE) today (Monday).

According to him, the acquisition aligns with Access Bank’s strategic vision.

He said: “We are going to issue a statement on the Nigerian NSE tomorrow (today). Kenya is a big market in Africa, it is a major trade route and major payment corridor.

“This aligns with our strategic vision. We have our own regulatory and board approvals. In Kenya, the bank is going through its own regulatory process. But the deal is imminent, so it could happen this week or next week.”

It was gathered that the Access Bank would acquire 93.57 per cent stake in the Kenyan bank as it seeks to consolidate its presence in the continent.

Access Bank would now join GT Bank and the United Bank for Africa Plc, two other Nigerian banks with a presence in the Kenyan market.

Access Bank Plc at the weekend reported a significantly improved performance for the nine months ended September 30, 2019, reflecting the positive impact of its previous merger with the defunct Diamond Bank. The bank posted a growth of 44 per cent in profit after tax (PAT) to N90.7 billion in 2019, up from N62.9 billion in the corresponding period of 2018.

The breakdown of the performance showed that Access Bank Plc ended the period with net interest income of N210 billion, compared with N123 billion in 2018, while non-fee income rose from N37 billion to N56 billion. Impairment charges stood at N10.611 billion, compared with N8.353 billion in 2018.

Personal expenses went up from N41.4 billion to N54.6 billion, while other operating expenses increased from N82 billion to N121 billion in 2019. Despite the high costs recorded, Access Bank Plc posted a profit before tax of N103 billion in 2019, up from N70.2 billion in 2018, while PAT rose by 44 per cent to N90.7 billion, from N62.9 billion in 2018.

Further analysis of the results showed that its merger with defunct Diamond Bank is yielding fruits as deposits soared from N2.56 trillion to N4.24 trillion, while loans and advances improved from N1.993 trillion. Total assets jumped from N4.942 trillion to N6.58 trillion.

iPOWER Week Kicks Off With Massive Deals, Unbeatable Prices

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iPOWER Week Kicks Off With Massive Deals, Unbeatable Prices

iPOWER Week, a week-long sales campaign offering best prices and massive deals on various power products and solutions, kicks off today, Monday, October 28th 2019. Equally important, the promotion will run online and offline until Friday, November 1st, 2019 across major retail platforms.

The iPOWER generator, which will be formally launched on Monday, is one of the star products on offer for iPOWER Week.

Designed with the power needs of the Nigerian consumer in mind, the revolutionary product which comes in various capacities between 2.5KVA– 7.5KVA boasts a longer life span with tested 500 hours continuous running. Further setting apart the iPOWER generator is its durability with 100% copper wiring and low fuel consumption

Other cutting-edge products and solutions lined up for the promotion include a wide variety of inverters, solar panels and big-power batteries from the iPOWER brand.

Further, iPOWER Week will offer all categories of shoppers and consumers best prices and deals on the various items on offer. Furthermore, the prices have been heavily discounted as part of efforts at helping Nigerians save big on essential power products ahead of the festive season.

Already, e-Commerce platforms Konga and Jumia is primed to start processing orders from bargain-hungry shoppers who are eager to be among the first to get their hands on the heavily discounted products on offer. In addition, walk-in shoppers can also take a shop at multiple offline retail stores nationwide.

Furthermore, there are freebies and other incentives for customers who shop during the duration of the campaign. These include electric kettles, sandwich makers, microwaves, toasters, coffee makers, among others.

Research and Development Manager for the iPOWER brand, Eche-Chukwuma revealed that iPOWER products come with a full 12 months’ warranty, even as he affirmed that shoppers can count on responsive support for the products purchased nationwide.

“iPOWER products are designed with state-of-the-art functionalities and engineered to resolve the power challenges faced by Nigerians. Customers are guaranteed a full 12 months’ warranty on the products. Also, our customers enjoy peace of mind with round-the-clock after-sales support nationwide,” Eche-Chukwuma concluded.

MTN Nigeria Celebrates Community Heroes in Lagos, Abuja & Port Harcourt

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MTN Nigeria Celebrates Community Heroes in Lagos, Abuja & Port Harcourt

MTN Nigeria Communications Plc, through its social investment vehicle, MTN Foundation, has celebrated 110 Nigerians at gala events in Abuja, Port-Harcourt and Lagos. The celebration is the climax of the third edition of the “What Can We Do Together (WCWDT)” initiative. The celebrated heroes are the individuals who nominated various communities that received interventions.

Dedicated to developing grassroots communities through collaborative efforts, WCWDT provides Nigerians with the opportunity to nominate a community for developmental projects.

Commending the nominators, Senior Manager, Program Implementation, MTN Nigeria, Abasi-Ekong Udobang, said, “The What Can We Do Together initiative reflects our sustained drive to collaborate with Nigerians in executing impactful projects in communities across the country. We believe the nominators are the heroes of this initiative as their noble efforts will go a long way in improving the quality of life for millions of Nigerians.”

“The altruistic gesture from the nominators led to various interventions by MTN Foundation in nominated communities, including the supply of medical equipment to 40 primary health centres with training for the medical staff on the use of the newly supplied equipment. Ten communities received solar-powered boreholes and learning materials (school bags, exercise books, raincoats and pencil cases) were distributed to over 15,000 pupils in 60 public primary schools across 36 states and the Federal Capital Territory,” he added.

Speaking at the appreciation event in Lagos organised for nominators from the western region, the Deputy Governor, Lagos State, Dr. Obafemi Hamzat represented by the Permanent Secretary, Education District III, Lagos State, Dr. Mrs. Yinka Ayandele in her speech, applauded MTN for the kind gesture. “Lagos State is so pleased to be associated with MTN Nigeria and indeed, the Governor has extended his appreciation for this gesture by the MTN Foundation,” she said.

Since the launch of the first phase of the WCWDT initiative in 2015, 510 communities across 454 local government areas have received diverse interventions from MTN Foundation. Forty communities have received 500KVA transformers, and 50 650ft boreholes, some of which are solar-powered. Primary health centres in 120 communities received essential medical equipment. In addition, 174 schools received furniture, and household supplies were delivered to 66 orphanages in different communities nationwide.

The MTN Foundation has over the years partnered with both public and private organisations to initiate sustainable development programmes in different focus areas with the aim of making life brighter for Nigerians.

E-commerce: Buhari, Konga and Nigeria first

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E-commerce: Buhari, Konga and Nigeria first

Ken Ugbechie

Africa is no longer the next frontier. Africa is the new frontier. The often vilified continent’s tomorrow is here. And it is audaciously reflecting in the e-commerce space where a new generation of smart, knowledge-driven and globally-tooled Africans are defining their identity and finding their niche. E-commerce is flowering in Africa and it has the capacity to get even bigger in the coming years going by statistics from the United Nations Conference on Trade and Development (UNCTAD).

Two major players define the Africa e-commerce ecosystem: Konga and Jumia. There are many others scattered across the continent. Jumia is a foreign company registered in Germany. But it has in recent time come under severe and highly inclement business weather. It became a victim of one of the challenges dogging e-commerce in Africa: Lack of trust. While listing in the New York Stock Exchange (NYSE), Jumia came under scrutiny and was found to have under-declared certain facts about its operation.

Trouble started when on May 9, 2019, Citron Research, a respected firm with a history of in-depth research in stock markets and investments, published a brutally damaging report accusing Jumia of overstating certain financial metrics in its April 2019 IPO prospectus and omitting adverse information about the number of returned, undelivered, or canceled orders from the prospectus.

In standard global practice especially for e-commerce investors, such facts are usually made available to guide prospective investors. On the strength of this information, Jumia’s share price crashed. It was considered by analysts as a bad day for Africa. But CNBC and other commentators were quick to deflect the Jumia NYSE fiasco from Africa, insisting that Jumia is a German company trading in Africa, and never an African company.

Acting on the Citron Research reports, Kirby McInerney LLP had put out a notice to concerned shareholders to fill out a contact form which it intends to aggregate to discuss the rights or interests of the shareholders with respect to the matter at no cost to the investors. Kirby McInerney has a rich history of litigation on behalf of investors in securities. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars.

The Citron Research report alleged that it has the “smoking gun” that shows why Jumia equity is “worthless.”

“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia,” the report said.

A report by marketwatch.com, quoted Citron as dismissing Jumia as an e-commerce fraud which came into the market claiming what it is not. The report said most of the claims of Jumia that allowed it into the global stock market were outright falsehood including claims of efficiency in delivery, customer numbers and quality of service and products. The Jumia (mis)adventure in the highly lucrative and strategic US market is largely seen by e-commerce pundits as a dampener for hordes of e-commerce start-ups coming out of Africa and eyeing the global market.

Africa’s ICT blogger and market evaluator, Ray Umukoro, warns other e-commerce firms out of Africa to learn from the Jumia fiasco. It’s a lesson the likes of Konga, Takealot, Kilimall, Bidorbuy, etc. should take to heart. The challenge is who will truly fly the Africa e-commerce flag with global trust, dignity and integrity. The odds stack in favour of Nigeria’s Konga.

Africa with 54 countries and estimated population of 1.25 billion people currently boasts average Internet penetration of 40 percent with most of the connected audience hooked on mobile devices. And with growing internet penetration, the African e-commerce market is predicted to head north as more efficient e-payment platforms and network efficiency are thrown into the mix.

Nigeria’s huge population of over 195 million people, a vibrant and tech-smart youth population, a progressive-minded middle class and largest economy status by gross domestic product (GDP) gives Konga a head-start over competition.

Nigeria in terms of e-commerce market size towers over South Africa (population of 55.5 million) and Kenya with a population of 48.5 million. These are market indicators that will combine to make Nigeria’s Konga a clear dominant player on the continent and a competitive global player in years ahead when it pushes to list on the international equity bourse.  Konga’s unique composite market mix of both online and offline experience, a model now being adopted by two major players, Amazon and Alibaba, put it at a great advantage.

To take the lead in Africa e-commerce, Nigeria must get her act right. It must avoid the lethargy that made foreign firms dominate her telecom and satellite TV markets. Nigeria’s telecom market is the toast of global players but it is a market dominated by foreign firms. In the digital satellite TV market, South Africa’s Multichoice rules the roost in a near-monopoly. It is only just now that the Nigerian government is mulling the idea of breaking the monopoly. This is not smart for a country that is truly the largest market in Africa.

The world is one huge market with the buzzword word, globalisation. But the newest and now more commonly adopted word and economic strategy is glocalisation. It simply means think global but start local; it also means grow your local market first or put your local interest uppermost before the global interest. China thinks China first. China gives you loan to execute Chinese contracts in your country usually with China infrastructure and personnel. Donald Trump has taught Americans to think America first; Britain is in the midst of a badly managed Brexit crisis which her leaders initiated to better British interest in a diverse Europe marketplace. South Africa thinks South Africa first, gradually edging small Nigerian businesses out of her space. Ghana is doing same. In all of this, the respective governments in these countries are consciously and quietly pushing and promoting the interests of their private equities in the international markets. That’s what governments do these days to beat competition.

Nigeria must think Nigeria first. Here, I applaud President Muhammadu Buhari push to grow local content and deepen Nigerian market with Nigerian products. The same policy and strategy should extend to tech economy. Nigeria is by far the biggest single African market. Whoever dominates Nigerian market in any sphere dominates Africa and by inference flies the African flag in the global marketplace. Promoters of Konga, Nigerians and Nigerian government should follow in the stead of America, Britain, South Africa, Ghana among others to put and sustain Konga in the commanding height of Africa e-commerce market. Only Nigeria and Nigerians can make Konga the e-commerce king in Africa. Konga’s pedigree of integrity, quality of goods and services, its peculiar composite strategy and thorough understanding of the Nigerian market put it at a vantage position to lead Nigerian market and by extension, African market.

The insult and impudence visited on Nigeria by the so-called multinationals in all sectors including oil and gas should make Nigeria change her template of bilateral relations. It must be a relationship that promotes Nigerian interest both at home and abroad. E-commerce is the current game-changer in consumer behaviour and Nigeria must consciously take the lead and not wait until a foreign firm does so thus adding to the nation’s capital flight issues. 

Ken Ugbechie, Social/Publicity Secretary of the Nigerian Guild of Editors wrote in from Lagos

Enabling Adultery.

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Enabling Adultery.

He was already driving out when his wife rushed out of the house to the car. She threw what she was holding at her husband and said, “Please, if you must do it, use this!”. The husband looked at what his wife threw at him. It was a condom!

A woman has told me on this platform that adultery is not a deal-breaker for her. I couldn’t help but wonder why any woman would be comfortable sharing her husband with other women. Could she be possibly sharing herself with other men too?

Excuses have been made for cheating husbands and women are some of the greatest enablers of this.

“Men are polygamous by nature. They are wired to be chasers. A woman, no matter that she takes care of her body and tries to appear attractive to her husband, he will still cheat. It is in his nature!”.

When you attribute a phenomenon to nature, you are simply saying that God is the causative agent! No, that is the sin nature! And what did you expect of a man with a wife with that kind of a mindset?

Dear Christian professional husband, the onus is on you to prove to your woman that you are in a different class!

“Marriage should be honoured by all, and the marriage bed kept pure, for God will judge the adulterer and all the sexually immoral” Heb.13:4, NIV.

Written by: Sola Sorinolu, (Christian Educator, Writer, Speaker, and Columnist)

Let’s discuss this, drop your comments below…

Paddy Rice Markets in 2019: A Primer on AFEX’s Outlook

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Paddy Rice Markets in 2019: A Primer on AFEX’s Outlook

Agricultural commodity prices are by their very nature seasonal, that is, they fall to their lowest around harvest and rise consistently as the lean season progresses. Although this cycle is fundamental, certain shocks to either supply or demand crash or spike prices as the case may be.

Recent events regarding the decision of the Federal Government of Nigeria to close all land borders have dislocated the price of rice which remains a key staple consumed in the country. A key reason given for the border closure is the need to halt foodstuff smuggling into the country, and since the closure has gone into effect a number of consumers have registered their feelings about the effects of the move on consumer prices of rice. We instead focus on the outlook for the paddy rice market in Nigeria for 2019, refraining from discussing the validity or otherwise of the closure pronouncement but seeking to provide insights based on historical evidence and our understanding of the commodities market.

The domestic market for paddy rice consists of farmers, traders and merchants as elements on the supply side while paddy rice millers (traditional and modern) and households represent the demand side. Historically, the price and quantity of imported parboiled rice available in markets across the country have been key factors determining the price levels of paddy rice produced domestically.

The closure of the borders has, however, set the pace for a rather volatile price environment in the paddy rice markets with Intra-month gains in October climbing up by 9.80% following the increased scarcity in rice supplies across markets in the country. This price behavior has shifted the support for paddy rice prices from NGN125, 000/MT as witnessed at the end of the past marketing year (2017/2018) to NGN140, 000/MT which we currently experience (2018/2019). By implication, supply side agents (farmers, traders and merchants) are faced with a more profitable year ahead.

Barring any increase in the dry season activities, the likelihood of increased raw material acquisition costs by paddy rice processors has been heightened as price appreciation and unavailability of alternatives will increase the willingness of farmers to trade at the open markets rather than sell to processing companies. In addition, the risks of counterparty risks (side selling) in forward contracts are heightened as cash payments by middlemen and village buyers induce farmers to divert commodities.

Chart 1: Price Movement in 2018/2019 Marketing Year

Our outlook for paddy rice prices in 2019/2020 marketing year is that of a 15% rise in prices as the impact of demand spike is expected to be mitigated, albeit marginally, owing to improved weather conditions in core producing areas across the country.

However, if the trade stalemate remains till November, rice prices could go higher than 20% as processors ramp up procurement to fulfil the seasonal increase in rice demand witnessed in December.

In conclusion, paddy rice market will be characterized by significant price hikes, violations of agreements under forwarding contracts and increased returns for supply-side agents in the paddy rice markets.

This post first appeared on the AFEX blog on October 25, 2019

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